This paper examines the reliability of estimates for construction costs and schedules of power generation projects in developing countries, and indicates how the results can be used to improve the selection and implementation of these projects. This is important for these countries, in terms of both the economic justification and the financing of these projects, as they need massive investments in power generating capacity. Based on regression analysis, the paper identifies factors that are significantly associated with bias and uncertainty in estimates of construction costs and schedules for a group of power generation projects approved for financing by the World Bank between 1965 and 1986, and completed by 1994. The paper concludes that estimated values were significantly biased below actual values and that the large variance in the accuracy of estimated values limits the benefit of making a simple adjustment factor to estimates. The paper finally shows how regression models based on the significant factors can be used to derive unbiased expected values that carry much greater reliability than the corresponding estimated values.
Energy Policy – Elsevier
Published: Mar 1, 1998
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